SRF LTD. Vs. CCE

JUDGEMENT

(1.) IN this appeal at the instance of the assessee the issue arising for consideration is whether the amount collected by the assessee as post removal expenses (PRE) from their buyers for delayed payment is liable to be added to the assessable value.

(2.) THE assessee is manufacturing various grades and kinds of nylon cord fabric. The period involved in these proceedings is 12.9.1997 to 30.6.1998. During the period the appellants were extending 45 days credit to their buyers. As a result of the time lag which occasioned in realization of the payments the appellants were incurring interest cost on receivable. Therefore, the appellants charged at the rate of Rs. 4.60 per Kg. from their buyers as interest expenses due to the extension of credit period to 45 days. This was separately charged in the invoices as PRE. The above amount would cover interest liability on average sale price of Rs. 178/ - per Kg. for a period of 45 days. All the buyers were intimated about the charging of PRE as interest cost for credit period, The appellants did not pay excise duty on PRE. Marketing pattern as above had been shown in the declaration dated 15.4.1998 filed before the Excise department, If the buyers make payment before the expiry of the credit period. PRE is refunded back to the buyers. While so show cause notice dated 21.10.2002 was issued to the appellant demanding duty on PRE. Even though the appellant filed reply to the show cause notice, the Commissioner was inclined to confirm the duty demand and impose a penalty of equal amount.

(3.) COMMISSIONER took the view that PRE is not in the nature of interest and that it was not known to the buyers that PRE was being collected on account of interest receivable. Another objection taken by the Revenue is that PRE was accounted in books of accounts of buyers as well as the appellants under heading "Purchases" and "Sales" respectively and not under "Interest" head and that no deduction of tax at source was done by the buyers. The Commissioner also took the view that since the assessee is charging a uniform rate to all the buyers, it cannot be treated as equivalent to interest on receivables. Relying on the statements made by Senior Manager and General Manager (Materials) of M/s. J.K. Industries and Senior Manager (Indirect Taxes) of M/s. Vikrant Tyres Ltd., the Commissioner took the view that the contention of the assessee that all their customers were made known about the nature of PRE, cannot be accepted.